02-091

Copyright © 2002 by Alicia Boisnier and Jennifer A. Chatman

Working papers are in draft form. This working paper is distributed for purposes of comment and discussion only. It may not be reproduced without permission of the copyright holder. Copies of working papers are available from the author.

The Role of Subcultures in Agile Organizations

Alicia Boisnier Jennifer A. Chatman1

1 The second author wrote this paper while a Marvin Bower Fellow at the Harvard Business School and is grateful for their support. We also thank Elizabeth Mannix, Rita McGrath, and an anonymous reviewer for their insightful suggestions.

The Role of Subcultures in Agile Organizations

Alicia Boisnier and Jennifer A. Chatman1 Haas School of Business

University of California, Berkeley

May 24, 2002

To appear in, R. Petersen and E. Mannix, Leading and managing people in dynamic organizations. Forthcoming, 2002.

1 The second author wrote this paper while a Marvin Bower Fellow at the Harvard Business School and is grateful for their support. We also thank Elizabeth Mannix, Rita McGrath, and an anonymous reviewer for their insightful suggestions.

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Organizations face increasingly dynamic environments characterized by substantial, and often

unpredictable technological, political, and economic change. How can organizations respond rapidly to

such changes or become more agile? Organizational agility, according to Lee Dyer, “requires a judicious

mix of stability and reconfigurability” (2001: 4). We consider an unlikely source of agility: organizational

culture. This may seem like an odd juxtaposition since strong unitary cultures exert a stabilizing force on

organizations by encouraging cohesion, organizational commitment, and desirable work behaviors among

members (e.g., Deal & Kennedy, 1982; Nemeth & Staw, 1989; O'Reilly & Chatman, 1986). This stability

generates cultural clarity and consistency among members, forces that, if the culture is strategically

aligned, enhance organizational performance (e.g., O’Reilly, 1989; Kotter & Heskett, 1992). But, such

stability may also constrain strong culture organizations from initiating or reacting to environmental

change (e.g., Benner & Tushman, 2002; Benner & Tushman, in press), a necessary capability for

optimizing performance (Lawrence & Lorsch, 1967; Child, 1972). Thus, strong cultures can provide

organizations with significant advantages, but when the basis for survival rests on an organization’s

ability to change and adapt, a strong culture can be a liability.

We propose that one way that strong culture organizations can become agile without losing their

basis of strength, is by allowing certain types of subcultures to emerge. We explore how organizations can

simultaneously reap the benefits of building and maintaining a strong culture while remaining responsive

to dynamic environments. Subcultures can permit an organization to generate varied responses to the

environment without necessarily destroying its internal coherence. Subcultures may provide the flexibility

and responsiveness that a unitary culture may limit.

Interestingly, the very existence of a strong organizational culture, one whose members agree and

care about their organization’s values, seems to preclude subcultures (O'Reilly, 1989; Saffold, 1988).

Indeed, researchers have depicted subcultures as detracting from a strong organizational culture (Martin,

1992). We suggest, instead, that subcultures have certain properties that can even strengthen an

organization’s overall organizational culture. First, subcultures vary in the extent to which they disrupt the

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overarching culture. Second, subcultures often emerge in response to changing demands and can serve as

an outlet for members to express conflict and dissent arising during turbulent times. Thus, subcultures

may provide a mechanism for changing less central values. Indeed, that subcultures are potentially

important with respect to affecting core values may further substantiate how difficult it is to change an

organization’s culture (e.g., Trice & Beyer, 1984). Reducing change-induced disruption can be

particularly advantageous if the overarching culture is strategically aligned and effective.2

Our goal in this chapter is to understand how subcultures, or relatively small clusters of members

that share a set of norms, values, and beliefs, influence strong culture organizations’ agility. We begin

with the proposition that organizations benefit from simultaneously managing strong, stable cultures

while maintaining the flexibility and adaptability necessary to survive the ebbs and flows of turbulent

environments (e.g., Tushman & O’Reilly, 1996; Tushman & Smith, 2002). We then distinguish among

various types of values to consider how subcultures can co-exist and evolve within strong organizational

cultures. We also investigate the conditions that stimulate subcultures to emerge both individual, group,

and organizational levels of analysis. Finally, we describe how subcultures can increase organizational

agility by providing a source of creativity and flexibility.

How Strong Cultures Create Stability

We define organizational culture as shared values that inform organizational members about how

to behave appropriately (e.g., O’Reilly & Chatman, 1996). Organizations with a strong culture create

clear and coherent values (Chatman & Cha, 2002; Saffold, 1988) and expect that members agree with and

care intensely about those values (Jackson, 1966; O’Reilly, 1989), even if core values emphasize dissent

and creativity (e.g., Flynn & Chatman, 2001; Sutton & Hargadon, 1996). Agreement refers to the level of

consensus (or crystallization, cohesion, consistency, or dispersion) among members about organizational

2 It is possible that an organization’s overarching culture is ineffective and misaligned with its competitive realities. In this case, disrupting the overarching culture may be desired, and subcultures may well be a useful tool to initiate more radical cultural change. We restrict our discussion to cases in which the overarching culture is reasonably effective and relatively aligned with an organization’s competitive position, rather than focusing on cases in which the overarching culture requires wholesale change.

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values and associated behavioral norms, while intensity refers to members' demonstrated commitment to

those values.

Academics and practitioners have touted the virtues of strong organizational cultures that

emphasize strategically relevant values. By increasing members’ understanding of organizational

objectives, ties to one another, and commitment, organizations with strong cultures increase the chances

that members can execute those objectives and, as a collective, increase organizational performance (Deal

& Kennedy, 1982; Pottruck & Pearce, 2001; Tushman & O’Reilly, 1997). Though some researchers have

questioned how well strong cultures improve bottom-line performance (Saffold, 1988), a growing body of

research and a host of salient examples demonstrate how organizations attain strategic advantages through

strong cultures (Collins & Porras, 1994; Gordon & DiTomaso, 1992; O’Reilly & Pfeffer, 2000b). For

example, Southwest Airlines’ ability to perform better than industry competitors over a sustained period

of time has been attributed to its strong culture focusing on keeping costs low and customers happy (e.g.,

O’Reilly & Pfeffer, 2000a; Friedberg & Friedberg, 1996).

Strong cultures may, however, impose a level of stability on organizations, and such stability has

mixed implications for performance. Denison and Mishra (1995) found that "stability traits" such as a

firm's mission, consistency, and normative integration, were related to its profitability. Specifically,

organizations with strong cultures had greater returns on investments, but only in the short run; after three

years the relationship between cultural consistency and performance became negative (Denison, 1990).

Strong cultures may enhance short-term success but inhibit long-term organizational performance; they

may even contribute to long-term failure by preventing organizations from adapting to changing

contingencies.

Sorensen (in press) found that organizations with stronger cultures were most effective when their

environments favored exploiting, or fully executing existing objectives using existing organizational

knowledge and approaches, rather than exploring, or discovering and developing new objectives using

new approaches. He reasoned that incremental adjustments to organizational routines were easier in

strong culture firms because participants have an agreed upon framework for interpreting environmental

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feedback and a common set of routines for responding to different signals from the environment

(Sorensen, in press: 2). Using the same reasoning, however, the agreed upon framework and set of

routines may inhibit an organization’s ability to embark on more radical strategic shifts. Reanalyzing

Kotter and Heskett’s (1992) data set of 200 firms and their cultures, Sorensen (in press) found that strong

culture organizations were more financially successful in stable environments and less successful in

dynamic environments. Thus, while cultural strength and stability may enhance organizational

performance in the short run and in stable environments, they may also inhibit an organization’s ability to

change, adapt, or innovate.

Gagliardi (1986) suggested that organizations with strong cultures are capable of only limited

change because members are especially resistant to changing those strongly held and widely shared

values. This resistance limits the range of permissible value changes to those that are compatible with

existing core values. Thus, even when strong culture organizations could benefit from changes that

require modifying their core values, resistant members may prevent such change from occurring. Wilkins

and Ouchi (1983) suggested that strong cultures can be adaptive, but cannot withstand radical changes

that directly challenge their basic assumptions. For example, such resistance threatened Westinghouse’s

survival, by preventing it from reaping any benefits from acquiring a factory automation business. The

head of Westinghouse’s advanced technology group concluded after this significant failure that, “It was a

classic case of trying to merge an entrepreneurial organizational into a relatively slow-moving, large

American corporation” (Nohria, Dwyer, & Dalzell, 2002: 11). Taken together, these perspectives suggest

that firms with stronger cultures are better at staying the course but that innovation poses a major

challenge (e.g., Nemeth & Staw, 1989; Staw, Sanderlands, & Dutton, 1981). Despite this evidence, we

propose that the claims of the incompatibility between strong cultures and organizational agility have

been overstated; instead, we propose that organizations with strong cultures can use subcultures to

become more agile and to drive innovation.

Can Subcultures Emerge in Strong Culture Organizations?

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Although there is no single definition of an organizational subculture, most approaches to

subcultures have common distinctions and features. For example, while many researchers have discussed

the role of sub-groups in organizations (Lawrence & Lorsch, 1967; Van de Ven & Ferry, 1980), not all

sub-groups can be considered subcultures. Subcultures are groups whose common characteristic is a set of

shared norms and beliefs. In contrast to subgroups, subcultures need not form around existing

subdivisions, such as departmental or functional groups (although they often do), nor do they need to be

consciously or intentionally formed, as we discuss below (Trice & Beyer, 1993). The range and variety of

subcultures is as diverse as the range and variety of existing organizational cultures. Though subcultures’

ubiquitous presence in organizations has been well documented (Bloor & Dawson, 1994; Hofstede, 1998;

Jermier, Slocum, Fry, & Gaines, 1991; Martin & Siehl, 1983; Van Maanen & Barley, 1984; Trice, 1993),

few have proposed that subcultures may instigate the sort of adaptation that also does not threaten an

organization’s coherence (see Tushman & O’Reilly, 1996, for an exception).

Martin (1992) developed an elegant model of cultures and subcultures by distinguishing between

conceptualizations of organizational cultures that were cohesive and unitary, or integrated, and those

characterized as collections of subcultures, or differentiated. A fragmented culture is ambiguous and open

to members' multiple interpretations. These distinctions imply that an integrated culture precludes

differentiated subcultures and vice versa, or that an organization may either have a single culture with no

subcultures, or subcultures with no overarching organizational culture. But, this typology does not

consider the possibility that subcultures might co-exist within an overarching culture. Perhaps this reflects

a conceptual division among organizational culture scholars; those focusing on the advantages of strong

cultures tend to highlight overarching cultures and rarely consider subcultures (e.g., Kotter & Heskett,

1992; O'Reilly, 1989), while those focusing on organizations as collections of subcultures rarely consider

that they could be united by a strong, overarching organizational culture (e.g., Rose, 1988; Sackmann,

1992; Trice & Beyer, 1993). By considering culture content and strength, we propose that subcultures can

develop within strong integrated cultures without weakening the overarching culture.

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Culture Content and Strength and the Coexistence of Subcultures: Distinguishing Between Pivotal

and Peripheral Values

Culture content refers to the specific emphases or activities to which the values and derived

behavioral norms are directed, or which values and norms emerge within an organization (Flynn &

Chatman, 2001). Despite their importance, we understand relatively little about how and why specific

values and norms emerge. Why, for example, do some work groups emphasize norms that regulate dress

(e.g., Pratt & Rafaeli, 1997) while others adopt norms that regulate where people should sit in meetings

(e.g., Puffer, 1999), or when they should arrive (e.g., Sutton & Hargadon, 1996)? Flynn and Chatman (in

press) suggested that values and norms arise from a group or organization’s demographic composition.

Visible differences create social categories influencing whether a group values, for example, cooperative

versus individualistic approaches to work (e.g., Chatman & Flynn, 2001). Culture strength refers to

members' level of agreement with and approval of those norms and values (e.g., O’Reilly, 1989). In

stronger cultures members are more likely to be rewarded for adhering to, or sanctioned for violating,

core values (O’Reilly & Chatman, 1996).

Schein (1988) observed that values varied across organizations and that members' cared more

intensely about some values than others, distinguishing between pivotal and peripheral values. Pivotal

values are central to an organization’s functioning; members are required to adopt and adhere to the

behavioral norms derived from these values and are typically rejected from the organization if they do not

(e.g., Chatman, 1991; O'Reilly & Chatman, 1996). Peripheral values are desirable but are not believed by

members to be essential to an organization's functioning. Members are encouraged to accept peripheral

values, but can reject them and still function fully as members. Thus, members' degree of conformity to

peripheral norms can vary considerably.

The strongest culture organizations, total institutions such as cults and prisons, could embrace

pivotal values that are so widely adopted and enforced that they preclude the emergence of peripheral

values, and, by implication, subcultures (e.g., O'Reilly & Chatman, 1996; Schein, 1961; Van Maanen &

Barley, 1984). Most business organizations, however, do not operate with only one culture (Trice &

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Beyer, 1993). A more likely profile is a strong culture firm that emphasizes both a set of pivotal values

important to its functioning and identity, as well as a set of peripheral values that are less relevant to each

members' or units' functioning. While Schein discussed the role of pivotal values for organizations, he did

not consider their potential role in subcultures. We propose that pivotal and peripheral values may be

more relevant to some parts of the organization than to others. Specifically, peripheral values may be

important to subcultures within an organization while being less essential to the identity and functioning

of members of the dominant organizational culture.

At strong culture Johnson & Johnson, for example, widely-shared, intensely-held core values

were pervasive across the organization, however individual operating units were given the autonomy to

determine how to operate on a daily basis. While the company’s credo emphasized customer and

employee satisfaction, the operating culture in a new medical products division was distinctly less

conservative and more innovative than a more mature product division. In this way, subunits were able to

act on the values that were important to them but peripheral to the functioning of the organization, leaving

the core pivotal values of the organization intact (Tushman & O’Reilly, 1997: 26-27).

Similarly, in a home health care service organization, Bloor and Dawson (1994) observed that

pivotal values included high professional standards and a commitment to client rehabilitation. Social

workers within the organization simultaneously embraced core values but also focused on ethical

behavior and client advocacy. Because the agreed that the pivotal values were important and the

peripheral values they adopted did not interfere with the organization’s pivotal values social workers’

beliefs did not detract from the strength of the dominant organizational culture. We, therefore, suggest the

following proposition regarding the coexistence of strong pivotal and varying peripheral cultural values:

Proposition 1: Organizations with strong pivotal values (high agreement and intensity among

members) can also sustain peripheral values on which members' agreement and intensity varies.

Types of Subcultures and their Likely Emergence in Strong Culture Firms

The conceptual dichotomy between unitary cultures and those characterized by subcultures may

be rooted in the misconception that subcultures always consist of people who oppose the dominant culture

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(e.g., Cohen, 1955; Hebdige, 1979; Webster, 1993; Willis, 1993; Yinger, 1970). From its origin in

sociology and anthropology, the term “subculture” has been associated with images of deviants,

delinquents, gangs, and other nonconformists such as hippies, British punk teenagers, or occult members.

Organizational ethnographers have found a variety of types of organizational subcultures, not all of which

are based on expressing opposing views (Bloor & Dawson, 1994; Jermier, Slocum, Fry, & Gaines, 1991;

Martin & Siehl, 1983; Sackmann, 1992).

Using a parent-child metaphor, Wolfgang and Ferracuti (1970) suggested that a subculture, like a

child, could never be entirely different from its “parent,” the larger culture. Instead, because the

subculture emerges from the dominant culture's values, some subcultural values may conflict with the

dominant cultures' while others may not. Researchers have distinguished between subcultures and

countercultures (e.g., Wolfgang & Ferracuti, 1970; Zellner, 1995). Subcultures represent tolerated

deviations that do not disrupt the normative solidarity of the larger culture’s values. In contrast, members

of countercultures hold discordant values and, by virtue of their membership, explicitly oppose certain

aspects of the larger culture. Countercultures are, therefore, unacceptable to members of the larger

organization.

Recognizing that not all subcultures are countercultures, it is, therefore, useful to distinguish

among subculture types. Martin and Siehl (1983) developed a typology of organizational subcultures,

including enhancing, orthogonal, and counter cultures, and in which each type exemplified a different

level of congruence with the dominant culture's values. Incorporating the notions of pivotal and peripheral

values with this subculture typology makes it possible to consider how subcultures can exist in an

organization without detracting from the strength of the overall culture. Members of enhancing

subcultures adhere to dominant organizational culture values even more enthusiastically than do members

of the rest of the organization. They agree with and care about both pivotal and peripheral values,

consistent with the larger organization’s core values. Members of enhancing subcultures' intense

commitment to particular peripheral values, that are consistent with those of the overarching culture,

distinguishes them as a subculture and from the other two.

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Members of orthogonal subcultures both embrace the dominant cultures’ values but also hold

their own set of distinct, but not conflicting, values. They embrace the pivotal organizational values but,

simultaneously, hold values that are peripheral to those of the overarching culture. Since the values that

differ between orthogonal subculture members and members of the dominant culture are less important to

the functioning and identity of the organization than are the pivotal values, the existence of an orthogonal

subculture does not threaten the cohesiveness of the overarching culture. Finally, members of a

counterculture disagree with the core values of the dominant culture and hold values that directly conflict

with core organizational values. Counterculture members hold values that conflict with pivotal

organizational values and can, therefore, threaten the strength of the overarching culture.

Peripheral and pivotal values vary in terms of their likely adoption in overall cultures versus

subcultures, and they may also vary independently of one another because the two kinds of values have

distinct qualities and function differently in organizations. One key difference is that peripheral values,

contained within subcultures, are more likely to change than pivotal core organizational values. Further,

the relative ease with which peripheral values within subcultures can change may provide organizations

with the capacity to respond to dynamic environments. First, since core values are tied to an

organization's and its members' identities, they are quite difficult to change without substantial resistance

(e.g., Ashforth & Mael, 1989; Dutton & Dukerich, 1991; Gagliardi, 1986). Further, internal mobility

patterns in organizations, in which people are likely to move across jobs and divisions, make it likely that

people ultimately become more committed to their organization over time than to specific subgroups in

which they are members for shorter periods of time (Chatman & Cha, 2002). Providing that the majority

of subculture members are more deeply committed to the core values of the organization than to the

peripheral values of their subgroup (an assumption that may not hold up in all cases, and that we consider

below), peripheral values, on which orthogonal subcultures primarily differ from the larger organization,

may be easier to change than pivotal values.

Finally, that subcultures are typically smaller makes them more malleable and responsive than an

entire organization. Smaller groups are more likely to be given a degree of autonomy that is less viable in

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large, centralized organizations. In some cases, smaller groups are associated with being strategically

weak and, therefore, not threatening (e.g., Galunic & Eisenhardt, 2001). Indeed, some organizations

intentionally keep subunits small in order to stimulate innovation (Tushman & O'Reilly, 1996). The

capacity to change and adapt at the subculture level has important implications for organizations that have

to respond to the evolving demands of a dynamic environment. We, therefore, propose that,

Proposition 2: Peripheral values associated with orthogonal subculture membership are more

likely to change over time than are pivotal organizational values.

The Paradox of Strong Cultures and Countercultures

We suggested that enhancing and orthogonal subcultures need not detract from strong

organizational cultures and, countercultures, by definition, do conflict with the dominant culture.

Therefore, countercultures may fail to emerge in strong cultures because the opposition they introduce

would weaken a strong culture and would likely stimulate members of the larger organization to defend

overarching values. We suggest, instead, that countercultures may well emerge, perhaps for relatively

short periods of time, in strong cultures. First, strong cultures can be oppressive. When values are strong,

dissent forms in reaction to the imposed values (Bourdieu, 1990; Hebdige, 1979). Brehm’s (1966) theory

of psychological reactance suggests that when peoples’ sense of behavioral freedom is threatened, they

may attempt to reassert it through direct or indirect (e.g., vicarious) oppositional behavior. In particular,

threatened individuals may develop a greater liking for the behavior that has been restricted.

Second, strong cultures can produce countercultures because, in promoting conformity, small

variations in behavior and attitudes become exaggerated (O'Reilly & Chatman, 1996). Even the slightest

variation in behavioral norms may encourage in-group distinctions to form (Brewer, 1979). Therefore,

those who are at all different may choose to separate themselves from the rest of the organization in order

to maintain their beliefs. Those who disagree with the strong culture values may be able to find a pocket

of dissent within the organization, that is, a counterculture (Martin & Siehl, 1983). In weaker cultures,

dissent is not necessary because there is enough freedom for varied values to emerge without being

constrained by a dominant overarching value framework. Thus, we propose that,

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Proposition 3: Countercultures will be more likely to emerge in organizations with strong

overarching cultures than in organizations with weak overarching cultures.

We suggest that strong organizational cultures can produce countercultures, but paradoxically,

countercultures may strengthen organizational cultures. Just as values are more salient when they are

violated (Kahneman & Miller, 1986), a counterculture’s opposition increases the salience of dominant

cultural values. Through a process of reflection and comparison with the values of the counterculture,

formerly implicit values become explicitly considered and openly debated. This may be likened to the

comparison process that is evoked when organizational members are considering whom to hire and how

to socialize them (e.g., Sutton & Louis, 1987), and the salience of value differences between merging

firms (e.g., Marks & Mirvis, 2001). For example, the recent Hewlett-Packard merger with Compaq

focused H-P employees on how consensus driven H-P was, and led them to resist the “cowboy” culture at

Texas-based Compaq, where “process is for wimps” (Quinn, 2002: 3).

The presence of a contrary point of view, or, in this case, a contrary set of values, can then

strengthen one’s commitment to a previously held set of beliefs or course of action (Lord, Ross, &

Lepper, 1979). Thus, the salient challenges posed by a counterculture may result in increased resistance

by the dominant culture (Staw et al., 1981). This value-reinforcing response is more likely to occur under

some conditions than others. Countercultures may be more disruptive, for example, when the

organizational environment is unstable and an organization's strategic direction is less clear.

Proposition 4: Countercultures may increase non-counterculture members’ commitment to the

existing overarching organizational culture.

This proposition may be most relevant early on in the life of a new counterculture’s existence. If

over time, a counterculture proves that its norms and values are superior to those of the overarching

culture, the counterculture may gain support and grow in membership. In such cases, countercultures’

norms and values may eventually usurp those of the dominant culture. For example, Martin and Siehl

(1983) describe how John DeLorean created a counterculture that focused on dissent and independence

because he was dissatisfied with General Motors’ overarching organizational culture that valued loyalty

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and conformity. Through charismatic leadership and vivid storytelling practices, DeLorean was able to

convince others that his cultural orientation was superior to GMs’. His counterculture movement gained

such tremendous momentum that the counterculture’s values were eventually integrated into the dominant

culture.

The previous discussion suggests that culture strength may contribute to counterculture

emergence. Below we consider a fuller array of factors leading to the emergence of specific types of

subcultures as well as their likely consequences in strong culture organizations.

How Subcultures Emerge and Change in Organizations

Most discussions of organizational subcultures assume that organizations operate in stable

environments; they place less emphasis on how subculture formation patterns may differ when

environments are uncertain or unstable (Rose, 1988; Trice, 1993; Van Maanen & Barley, 1985). We,

therefore, consider how a dynamic organizational environment may affect whether subcultures are likely

to emerge and change.

Subcultures can form based on a variety of societal, organizational, and individual characteristics.

Large, complex organizations are likely to resemble the larger society in which they are situated

(Gregory, 1983), and may, therefore, contain many of the same subcultures, or groupings of values, as

would be found outside an organization. While the sub-groups found in society may also appear in

organizations, a variety of organization-specific subcultures may also emerge. Organizational subcultures

may be based on membership in various groups such as departments, workgroups, and teams; levels of

hierarchies, such as management versus support staff; professional and occupational affiliations; physical

location in the organization; socio-demographic categories such as sex, ethnicity, age, or nationality;

informal groups like those formed by friendships; and performance-related variables such as

organizational commitment and work performance (Jermier, Slocum, Fry & Gains, 1991; Rose, 1988;

Trice & Beyer, 1993; Van Maanen & Barley, 1984, 1985).

Various organizational, group, and individual characteristics contribute to subculture formation,

and, given the tradeoffs to individuals of forming subcultures, including the time investment or the risk

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involved in looking less loyal to the overarching organization, they are unlikely to join or form

subcultures without support from others. We suggest that subculture formation is contingent upon: 1)

structural properties that make organizations conducive to subculture formation, 2) group processes that

cause individuals to come together to form subcultures, and 3) individual members’ propensity to form

and join subcultures. We explore each of these factors below.

Structural Bases for Subculture Formation

Certain characteristics, such as organizational size, task differentiation, power centrality, and

demographic composition, make some organizations more susceptible to subculture divisions than others.

Subcultures are more likely to develop in larger, more complex, or bureaucratic organizations since these

organizations are more likely to encompass a variety of functions and technologies (Rose, 1988; Trice &

Beyer, 1993; Van Maanen & Barley, 1985). Employees have less contact with one another as

organizations grow in size, as distinctions among their tasks increases, and as task interdependence

decreases (Koene, Boone, & Soeters, 1997). Similarly, task differentiation is typically associated with

different occupational and professional orientations. The existence of distinct professional groups within

an organization may encourage subculture formation since professionals in organizations tend to hold

values that cut across organizational boundaries but may differ from the values of the non-professionals

within an organization (Bloor & Dawson, 1994; Trice, 1993; Van Maanen & Barley, 1984). Thus,

subcultures are more likely to form around differentiated tasks, ultimately leading to lower cohesion

among organizational members not working on the same tasks.

Subcultures may also emerge in organizations in which power is decentralized. Martin and Siehl

(1983) attributed the emergence of DeLorean’s counterculture at General Motors to their decentralized

power structure while Hage and Aiken (1967) found that more decentralized power was associated with

more professional activity and hierarchical differentiation. Similarly, Tushman and O’Reilly (1996)

identified decentralized decision-making as important to the autonomy and functioning of organizational

subcultures in innovating firms since it enabled members to obtain the resources and autonomy necessary

to construct and maintain a subculture. We, therefore, propose that,

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Proposition 5: Subcultures are more likely to emerge in larger organizations with greater task

differentiation, more divisions (functional or product), more groups of professionals, and more

decentralized power and decision-making than in smaller organizations with less task

differentiation, fewer divisions or professional groups, and more centralized power and decision-

making.

Changes in environmental conditions may lead to structural changes that drive subculture

formation. As employees within an organization becomes more diverse or tasks become more

differentiated, subcultures will be more likely to form. Structural changes resulting from environmental

uncertainty, such as decentralization (e.g., Burns & Stalker, 1961), are likely to lead to an increase in

subculture emergence. For example, professional groups may be more likely to assert their distinct values

when they perceive the organizational environment to be unsettled (Bloor & Dawson, 1994). Although a

professional subculture may exist relatively undetected for some time, the degree to which the

subculture’s values will become articulated is somewhat dependent upon the stability of the

organizational context. We, therefore, propose that,

Proposition 6: Subcultures will be more likely to emerge in organizations operating in more

dynamic than static environments.

Group Processes Affecting Subculture Formation

Subcultures are likely to form among members who interact often and who face similar problems,

providing them with opportunities to exchange concerns about the existing culture (Cohen, 1955). Thus,

existing organizational groupings, such as work groups, are particularly likely to evolve into subcultures.

Subcultures are more likely to form when individuals work together on a task because values may become

specific to the task on which the group is focused (Koene, Boone, & Soeters, 1997; Trice & Beyer, 1993;

Van Maanen & Barley, 1985). A pre-existing work group transforms into a subculture when members

develop and adopt task-specific norms and values. For example, a peripheral overall cultural value that

favors individualism may be dysfunctional for a team that requires close, interdependent teamwork to

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complete their tasks (e.g., Chatman & Spataro, 2002). Therefore, the team may adopt a different set of

more collectivistic values, forming an orthogonal subculture.

Alternatively, a critical mass of similar-thinking individuals could join together to form a

subculture. For example, Rose (1988) proposed that when individuals disagree about, or are dissatisfied

with, an organization's values, they will form smaller groups comprised of members who agree with one

another. In his study of youth gang culture, Cohen (1955) described how dissatisfied youths “shopped

around” for kindred souls. A process of mutual conversion occurred gradually as members began subtly

expressing their oppositional views to one another. If others supported those views, the conversations

between them became more explicit and intense until actors had identified themselves as a group with a

subculture, that is, a shared frame of reference that members preferred to the existing cultural frame.

Like-minded individuals are attracted to subcultures in each of these cases for the same reasons:

The well-supported similarity-attraction paradigm suggests that individuals would prefer to be around

others with similar attitudes, including perceptions of the organization and their jobs (Berscheid, 1985).

Therefore, when members of an organization are particularly satisfied or dissatisfied about their

organization’s values, they may seek the camaraderie of others who share their views. In sum, shared

values combine with frequent interpersonal interaction to create subcultures (Braver & Wilson, 1986;

Cohen, 1955).

Like structural forces, group forces also change when the environment changes. Task groups, or

groups that have a high level of task interdependence and regular face-to-face contact, may be particularly

likely to become subcultures during times of organizational uncertainty. First, such groups may find that

their values begin to diverge from those held by members of the dominant culture as they respond to the

specific changing demands of their task environment. For example, if a group that initially focused on

discovering new technology actually identified one that was, subsequently, widely adopted in the market,

they might then be asked to make that technology as efficient as possible rather than to continue to

discover other new technologies (e.g., Benner & Tushman, 2002). This shift from exploration to

17

exploitation would clearly require a shift in cultural values (Sorensen, in press). Thus, as a work group's

performance expectations and goals change, their values will change as well.

A critical mass of like-minded individuals may also develop in response to unpredictable events

as a way for members to maintain a sense of stability. For example, the changing environment that is

produced by mergers or acquisitions may result in subculture formation as members of the consolidated

firm attempt to cling to their previous firm’s values (Nahavandi & Malekzadeh, 1988). We, therefore,

propose that,

Proposition 7: Work groups operating in more dynamic environments will be more likely to

transform into subcultures.

Individual Bases for Subculture Formation

People must be willing to join in order for subcultures to form. However, this should not imply

that people necessarily consciously or intentionally choose to belong to a subculture. Instead, people may

find themselves to be part of a subculture without making the conscious decision to join. In the previous

section on group processes, we described ways that individuals may gradually, and even unintentionally,

come together to form subcultures. In this section we discuss the dimensions that are relevant to people’s

propensity to join subcultures. Three dimensions are likely to be associated with an individual’s

propensity to join a subculture: (1) psychological reactance; (2) satisfaction with dominant culture values;

and (3) commitment to the organization. Each of these has a dispositional and situational component, and

we, therefore, treat each factor as an existing psychological state emerging from individual differences or

contextual cues.

When people believe that their behavioral freedom has been threatened, they may experience

reactance, and are likely to behave in oppositional ways (Brehm, 1966). Reactance can be induced by

situations that are perceived to be behaviorally restrictive. This might include a situation in which an

authority figure, such as a manager, makes demands on behavior, or in which the normative demands of

the situation require high levels of behavioral conformity (e.g., O’Reilly & Chatman, 1996). Thus, strong

18

culture firms are likely to induce more behavioral reactance among members than are weaker cultures,

consistent with Proposition 3 above.

Further, regardless of contextual factors, some people may be more prone to oppositional

behavior and attitudes than are others (Dowd, Milne, & Wise, 1991). Characteristics associated with

reactance include a person’s tendency to be argumentative, uncooperative, behaviorally deviant, and

unwilling to take others' advice or to do as others ask. A person’s tendency to behave oppositionally has

implications for their propensity to join a subculture. People who are predisposed to non-conformity are

more likely to reject strong culture values regardless of their content. Whether situationally or

dispositionally based, individuals higher in reactance will be more likely to deviate from an organization's

values than will those lower in reactance, and, those who are higher in reactance will be more likely to

join a subculture.

A person's propensity to join a subculture may also be determined by their level of satisfaction

with dominant cultural values (Martin & Siehl, 1983; Rose, 1988). An extensive literature on the

dispositional nature of work satisfaction has accumulated (see Judge & Larsen, 2001 for a review).

Researchers have demonstrated that a person's tendency to be satisfied at work is stable over time and

across situations; it is positively associated with positive affectivity, self-esteem, and self-efficacy, and

negatively associated with negative affectivity, and neuroticism (e.g., Staw, Bell & Clausen, 1986; Staw

& Ross, 1985).

A person's satisfaction can also be influenced by the organizational context (e.g., Arvey,

Bouchard, Segal, & Abraham, 1989). Through a process of reflecting on and interpreting organizational

culture, organization members may perceive contradictions that result in dissatisfaction (Cha &

Edmondson, 2001). People are primarily motivated to form subcultures to solve the problems they

perceive with the dominant culture (Cohen, 1955). Subcultures allow members to resolve the

discrepancies between actual and desired cultural norms by providing a different, more personally

satisfying, frame of reference. Thus, being dissatisfied with one’s job or organization is likely to increase

one’s propensity to join a subculture (Rose, 1988). This is consistent with the view that subcultures

19

develop in response to ideological conflict or even intentional countercultural movements (Trice & Beyer,

1993; Van Maanen & Barley, 1985).

Similarly, employees who believe that the values held by members of their organization are

inappropriate to accomplish their goals or drive their organization’s success, more generally, may attempt

to modify those values (Graham, 1986). Theories of self-justification suggest that disagreeing with an

organization’s values while continuing to work for that organization is an unstable state; people will be

motivated to reduce this dissonance (e.g., Aronson, 1968; Staw, 1977). Joining a subculture comprised of

people who share one's values may be one way to resolve such dissonance by providing means to exercise

voice, as depicted in Hirschman’s (1970) well-known exit-voice-loyalty model.

Levels of individual organizational commitment, or a loyalty toward and identification with one's

employing organization (Meyer & Allen, 1991; O’Reilly & Chatman, 1986), may also influence

subculture formation. Like work satisfaction, commitment may be partially determined by dispositional

traits such as positive and negative affectivity (e.g., Cropanzano, James, & Konovsky, 1993). More

commonly, however, commitment has been examined in terms of the organizational context, and

members of strong culture firms are more likely to be committed to their organization (Caldwell,

Chatman, O’Reilly, 1990; Chatman, 1991; O’Reilly, 1989; O’Reilly & Chatman, 1996). This is

particularly true for normative commitment, which stems from a psychological attachment to an

organization and involves identifying with and internalizing an organization’s values (O’Reilly &

Chatman, 1986). As the organization’s identity becomes integrated into a person’s self view, he or she

becomes more committed to promoting the organization's well being, leading strong cultures to grow

stronger over time. The link between strong culture firms and compliance-based commitment, or

commitment based on instrumental or extrinsic rewards, is less clear (e.g., Meyer & Allen, 1991; O’Reilly

& Chatman, 1986).

In sum, we suggested that an individual’s propensity to join a subculture increases with higher

levels of psychological reactance, and lower levels of satisfaction with pivotal norms and normative

commitment to the organization. Essentially, each of these states produces a negative response to the

20

overarching organizational culture, leading to the desire to belong to a subculture. However, we expect

individuals experiencing these negative responses to be more likely to join some types of subcultures than

others. Specifically, those who are high in reactance and low in satisfaction and commitment would be

more likely to join either an orthogonal or counterculture, rather than an enhancing subculture, since

orthogonal subcultures deviate somewhat from the organization’s peripheral values and countercultures

deviate completely from the organization’s pivotal values. People who experience lower levels of

reactance and higher levels of satisfaction and commitment may actually be more likely to join an

enhancing subculture, which is comprised of individuals who embrace cultural values even more strongly

than the rest of the organization. Therefore, we propose that:

Proposition 8: People who experience higher levels of reactance and lower levels of satisfaction

and normative commitment will be more likely to join orthogonal subcultures or countercultures

than enhancing subcultures compared to people who experience lower levels of reactance and

higher levels of satisfaction and normative commitment.

Because levels of psychological reactance, satisfaction, and commitment may be partially

situationally determined, they may be susceptible to change along with the organizational and normative

environment. Changing situational dynamics could moderate a person's dispositional tendency toward

reactance and make them behave more or less oppositionally. One of the main reasons that people resist

change is that they anticipate losing power (e.g., Frost & Egri, 1991). However, people can view change

as a threat or an opportunity. A person's dispositional level of reactance may determine how positively he

or she views organizational change in response to a dynamic environment. Those members of

organizations facing more dynamic environments who are prone to reactance may be more likely to

perceive that previously held freedoms are threatened. In contrast, those who are less prone to reactance

may view changes as opportunities that actually liberate them to take certain desired risks. We, therefore,

propose that a person's tendency toward reactance will moderate their reaction to dynamic environments,

and, specifically, their propensity to join a subculture.

21

Like reactance, satisfaction levels are susceptible to change along with the organizational and

normative environment. Values are more likely to shift among organizations facing dynamic

environments. These shifts are likely to influence members' satisfaction with organizational values. In a

longitudinal study of research and development firms, Hall and Mansfield (1971) found that

environmental change and satisfaction were related. Members' job satisfaction and job identification

decreased in response to cutbacks in available financial resources provided by U.S. government funding.

In another longitudinal study, organizational change increased nursing educators’ satisfaction with their

jobs (Bojean et al., 1982). People’s perceptions of whether changes are positive or negative will influence

whether they join subcultures in response to dynamic environments.

A person's commitment may be as susceptible to change from outside forces as is their reactance

and satisfaction. Since normative commitment is highly dependent upon a person's identification with and

attachment to the values of their subculture and the organization, their level of commitment may change if

organizational values change in response to external contingencies driven by a dynamic environment. For

example, Jones (2000) described how changes in the task environment stimulated subculture emergence

in a domestic appliance factory. When a new managing director eliminated the use of scientific

management practices in favor of more modern human resource management techniques, a group of

former engineers, who continued to be personally committed to the old way of doing things formed their

own subculture. As a result of the organization’s attempt to adapt to a new environment, these members

relocated their commitment from the organization to their subculture.

People’s experiences with changes in the organizational environment may moderate their pre-

existing levels of reactance, satisfaction, and commitment to produce changes in their tendencies to join

subcultures. When people perceive changes as negative they may be more likely to join orthogonal

subcultures and countercultures and less likely to join enhancing subcultures (and vice versa for positive

changes). Whether or not changes are perceived as positive or negative is partially determined by pre-

existing levels of psychological reactance, satisfaction, and commitment. Therefore, we propose that:

22

Proposition 9: Peoples’ levels of dispositional reactance, satisfaction with changes, and

commitment to the organization will moderate the relationship between environmental dynamism

and their propensity to join a subculture. Those high in reactance, those who perceive changes as

dissatisfying, and those who are highly normatively committed will be more likely to join an

orthogonal subculture or counterculture when their organization experiences a more dynamic

environment while those whose dispositional reactance is low, those who perceive changes as

satisfying, and those who are less normatively committed will be similarly less likely to join these

subcultures regardless of the level of environmental dynamism their organization faces.

Consequences of Subcultures for Strong Culture Organizations

Having identified various types and features of subcultures, the conditions under which they are

likely to emerge, and the individual characteristics that might compel a person to join a specific type of

subculture, we are now in a position to consider the impact subcultures may have on the organizations in

which they exist. Researchers have speculated about whether subcultures are beneficial or detrimental to

organizations (e.g., Galunic & Eisenhardt, 2001; Meyer, 1982; Tushman & O’Reilly, 1996). For example,

Van Maanen and Barley (1985) characterized subcultures as containing seeds of conflict; this conflict

may emerge when members of differing cultures are forced to confront one another. Similarly, Gregory

(1983) noted that ethnocentrism operated in multicultural organizations; members of subcultures

perceived things only from their cultural perspective, also perpetuating conflict. Hofstede (1998) did not

specify whether subcultures were inherently good or bad for organizations, but suggested that managers’

lack of awareness of existing or potential subcultures can be damaging since subculture formation

provides information about employees' perceptions about the organization.

We suggest that subcultures can both weaken an organization’s culture or provide important

benefits to strong culture organizations, particularly those operating in dynamic environments.

Organizations facing dynamic environments are “breeding grounds” for subculture emergence. Members

of strong cultures may more vehemently resist change, and change within strong culture organizations

induces major conflict and dissent. Subcultures can absorb this conflict and dissent while leaving the

23

overarching values of the organizational culture intact. Subcultures may, therefore, serve as mechanisms

to contain conflicting priorities that may otherwise be widespread and potentially more difficult to

manage at the organizational level (Meyer, 1982). Strong culture organizations can consider the benefits

of alternative values and approaches that the subculture presents without destabilizing the entire

organization.

In this way, subcultures may offer a way for strong culture organizations to remain flexible

enough to change and adapt to external contingencies. This is an enormous benefit considering how

difficult it is for strong culture organizations to innovate, as some say, squelching creativity by

encouraging conformity of thought and behavior (e.g., Nemeth & Staw, 1989). We suggest that strong

cultures can also foster innovation by stimulating subcultures of creativity, or subcultures in which

creativity is the central value. That is, subcultures can develop in response to constraints imposed by the

strong values of the larger organizational culture. At the same time, subcultures can serve as containers of

creativity in which ideas can formulate relatively independently of the constraints or influences of the

strong culture (Martin & Siehl, 1983). The idea that creativity flourishes only in isolation of strong

organizational pressures is not new (e.g., Galbraith, 1982). But subcultures provide an additional

advantage to managing innovation because, while they are separate enough to allow creativity to flourish,

they are also still part of an organization. If successful innovation requires both coming up with creative

ideas and getting them implemented (Caldwell & O’Reilly, 1995; O’Reilly & Flatt, 1986), subcultures

may provide a place for creativity to grow as well as a way to coordinate with members of the dominant

culture to implement the ideas (Kanter, 1988). Subcultures can make this seemingly contradictory pair of

requirements possible because they are both somewhat removed from strong culture norms and, at the

same time, connected to the larger resources and coordination capabilities of an organization.

Tushman and O’Reilly observed ambidextrous organizations containing multiple cultures and

characterized them as being simultaneously tight and loose; they had strong, consistent cultures across the

entire organization, but allowed for “appropriate variations to occur across units” (1996: 27). These

organizations were successful because of their normative structure in which the strong overarching

24

cultures allowed for trust and predictability, and promoted information and resource sharing, while their

subcultures provided flexibility by allowing each business unit to determine how best to innovate. While

the subunits had enough autonomy to innovate in their own way, they were still part of a larger

organization that was unified and capable of implementing their new ideas. Thus, we propose that,

Proposition 10: Strong culture firms that allow subcultures to emerge will be more innovative

than strong culture firms that prevent subcultures from emerging.

Implications and Conclusions

We explored the relationship between strong organizational cultures and subcultures in dynamic

organizations. We suggested that, although strong culture organizations and their associated stability

generally enjoy better performance than do weaker culture organizations, strong culture organizations are

not as adaptive as may be necessary for their long-term survival, particularly those facing dynamic

environments. We suggested that strong culture firms might become more agile by allowing subcultures

to emerge. In some ways, our theory of subcultures can be compared to Ashby’s (1956) law of requisite

variety in the organizational strategy domain. He proposed that organizations with more variety are better

equipped to respond to a complex environment. We propose that norm variation, generated by subcultures

characterized by creativity, can similarly foster innovation and adaptation to dynamic environments. In

addition to generating norm variation, our view of subcultures focuses on the relationship between

subcultures and strong culture organizations for making an organization more agile.

We suggested that, in contrast to the popular notion that strong organizational cultures may

preclude subcultures from emerging, strong cultures may actually sew the seeds of subculture emergence.

Following Martin and Siehl (1983), we distinguished between different types of subcultures that vary in

terms of the extent to which members agree with overarching cultural values. Extending Schein’s (1988)

ideas about organizations having pivotal values that are critical to the organization as well as peripheral

values that are desired but not essential, we suggested that peripheral values can vary at the subcultural

level without negatively affecting the organizations’ pivotal values.

25

We then turned to the causes for subculture emergence and considered various individual, group-

level and structural bases for subculture formation. In addition, we speculated about how these factors

may change in dynamic environments. We proposed that subculture emergence, as well as changes in

subculture membership and prominence, would be more frequent in organizations facing dynamic

environments. Finally, we depicted subcultures in strong culture organizations facing dynamic

environments as receptacles for dissent and potential sources of creativity and flexibility. More

specifically, agile organizations may contain subcultures that generate creativity within a strong

overarching culture, and foster the innovation that is critical for them to survive in dynamic environments.

Though we have only provided one perspective on the role of subcultures in agile, strong culture

organizations, many more perspectives and issues might be considered in future research. For example,

specific values or norms are likely to be associated with the emergence of certain types of subcultures.

Specific bases for subculture formation (functional departments, demographic differences, friendships,

etc.) may, likewise, influence the type or content of subculture formation. For example, orthogonal

subcultures may be more likely to form around departments or other functional work divisions since these

emphasize specific work-related values, while countercultures may form around union affiliation since it

has historically been associated with animosity toward management.

Researchers might also distinguish organizations that allow subcultures to emerge from those that

prevent subcultures from emerging. Particular organizational forms or stages of organizational growth

may be associated with subculture emergence. Are subcultures more common in start-ups or well-

established firms? Further, characteristics of the task environment may influence the ways subcultures

form and interact with the organizational culture, such as the degree to which tasks are aligned with the

goals of the organization, or the types of tasks being performed. Finally, industry or market-level factors

should be considered. For example, subculture formation may be affected by labor market conditions.

Dissatisfied people may leave a firm rather than form or join a subculture when exit options are plentiful,

and, likewise, they may form or join countercultures when exit options are more constrained. Orthogonal

cultures may form when countercultures are too risky for individual members. Finally, researchers might

26

consider the temporal nature or typical lifecyle of subcultures including when a subculture is likely to

form, thrive, decline, and dissipate, particularly in relation to an organization’s lifecyle.

Our objective in this chapter was to develop an agenda for subculture research. As such, we may

have raised more questions than we answered. But, we hope that we have contributed to greater mapping

of the relevant terrain to understand the role of subcultures in strong culture organizations.

27

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